Solid News

USDJPY Market Update

2/13/2023 11:08 AM

The USD/JPY pair is showing moderate growth, testing 132.15 for a breakout. The US dollar is once again trying to demonstrate corrective dynamics after extremely ambiguous trading last week, when the currency opened with a gap up, but during the day it was unable to consolidate on new local highs. Moreover, by the end of the week, the yen began to noticeably strengthen, receiving support from hopes regarding the future Governor of the Bank of Japan. Market participants continue to debate the most likely candidate for the next governor, which could be Kazuo Ueda, economist and former professor at the University of Tokyo, known for his "hawkish" views on monetary policy amid criticism of the Bank's moves, as rising bond yields begin to affect public finances. Last year, a short-term interest rate hike pushed the underlying yield of 10-year bonds up 40 basis points, peaking at 0.48% by the end of the year. According to new estimates, a 1.0% increase in yields across the curve would raise debt service costs by 3.6 trillion yen in fiscal 2026. The incumbent regulator governor Haruhiko Kuroda is due to step down on April 8 after serving two five-year terms. Kazuo Ueda's endorsement could also facilitate dialogue with foreign central banks and market participants, according to Nikkei Asia, as he received his Ph.D. in economics at the Massachusetts Institute of Technology.

Meanwhile, released on Friday, February 10, macroeconomic statistics from Japan again turned out to be disappointing: the Producer Price Index in January showed a slowdown from 0.7% to 0.0%, while analysts had expected 0.3%.

Bollinger Bands in D1 chart show moderate growth. The price range expands from above, freeing a path to new local highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). The indicator is trying to consolidate above the zero level. Stochastic, which showed a corrective decline at the end of last week, is again inclined to reverse into an upward plane. The indicator is located near the level of "80", which indicates the risks of the American currency being overbought in the ultra-short term.

Resistance levels: 133.00, 133.61, 134.50, 135.57. | Support levels: 132.00, 131.00, 130.00, 129.00.

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